Oil prices closed lower on Wednesday, marking the third consecutive day of high-level consolidation as investors await developments on the geopolitical front. Market participants are maintaining a wait-and-see approach ahead of the third round of U.S.-Iran negotiations scheduled for February 26 in Geneva, Switzerland. Previously, on February 19, former President Trump stated that a decision on whether to take military action against Iran would be made within the "next 10 days," warning that if Iran refuses a deal, the strike would be "more severe" than in 2025. Additionally, on Wednesday, the U.S. continued to impose a new round of sanctions related to Iran. Based on the timeline, the question of whether the U.S. will take military action against Iran, after nearly two months of speculation, may soon be answered.
The EIA reported that for the week ending February 20, commercial crude oil inventories, excluding strategic reserves, increased significantly by 15.989 million barrels to 436 million barrels, far exceeding the expected increase of 1.481 million barrels. Supply-side volatility caused by U.S. winter storms and changes in imports and exports has led to continued instability in inventory data. Despite this substantial inventory build, oil prices did not experience a sharp decline, showing considerable resilience. Three informed sources revealed that OPEC+ will consider increasing crude oil production by 137,000 barrels per day in April during its March 1 meeting, thereby ending a three-month production increase pause. Given oil prices posting their best annual start in four years, it is highly probable that OPEC+ will ultimately decide to proceed with the production increase at this meeting to prepare for the peak summer demand season.
Furthermore, it is noteworthy that international tanker freight rates have surged since the Lunar New Year holiday, leading to a substantial increase in transportation costs. This change is reflected in the recent performance of SC crude, the benchmark for consumer-side oil prices, which has been noticeably stronger than that of WTI and Brent crude.
Regarding oil price volatility, the impact of supply and demand fundamentals remains secondary. Investors continue to focus on the negotiations commencing today in Geneva. With the USS Gerald R. Ford aircraft carrier having returned to port for repairs, the probability of an immediate U.S. military strike on Iran has decreased. However, these negotiations remain critical, and their outcome could trigger significant fluctuations in oil prices. Given the substantial uncertainty facing the market at this stage, it is advised to strengthen risk control and participate cautiously.
Daily Market Movements: WTI crude oil futures fell by $0.21, or 0.32%, to settle at $65.42 per barrel. Brent crude oil futures rose by $0.11, or 0.16%, to settle at $70.69 per barrel. INE crude oil futures fell by 0.63%, settling at 486.5 yuan.
The dollar index fell by 0.24% to 97.66. The Hong Kong Exchange USD/CNY rate fell by 0.15% to 6.8568. The U.S. ten-year Treasury yield was unchanged at 113.31. The Dow Jones Industrial Average rose by 0.63% to 49,482.15.
Recent Key News: EIA Report: For the week ending February 20, U.S. commercial crude oil inventories, excluding strategic reserves, increased by 15.989 million barrels to 436 million barrels, a rise of 3.81%. This compares to an expected increase of 1.481 million barrels and a previous decrease of 9.014 million barrels. Cushing, Oklahoma, crude oil inventories increased by 881,000 barrels, compared to a previous decrease of 1.095 million barrels. U.S. Strategic Petroleum Reserve inventories were unchanged at 0 barrels, compared to a previous increase of 229,000 barrels. Distillate fuel inventories increased by 252,000 barrels, versus an expected decrease of 1.594 million barrels and a previous decrease of 4.566 million barrels. Gasoline inventories decreased by 1.011 million barrels, compared to an expected decrease of 560,000 barrels and a previous decrease of 3.213 million barrels. Heating oil inventories decreased by 119,000 barrels, compared to a previous increase of 362,000 barrels.
EIA Report: U.S. domestic crude oil production decreased by 33,000 barrels per day to 13.702 million barrels per day for the week ending February 20. U.S. crude oil exports decreased by 277,000 barrels per day to 4.313 million barrels per day. U.S. commercial crude oil imports, excluding strategic reserves, were 6.659 million barrels per day, an increase of 135,000 barrels per day from the previous week. U.S. Strategic Petroleum Reserve inventory remained unchanged at 415.4 million barrels. The four-week average supply of U.S. petroleum products was 21.391 million barrels per day, up 5.38% compared to the same period last year. EIA implied demand for crude oil was 18.077 million barrels per day, compared to 21.547 million barrels per day previously.
Amid Iran tensions, Saudi oil exports surge to a three-year high. This month, Saudi Arabia is on track to export the highest volume of oil from its ports in nearly three years. Meanwhile, crude traders are closely watching the tense situation between the U.S. and Iran. Tanker tracking data shows that Saudi crude exports in the first 24 days of February jumped to 7.3 million barrels per day, the highest level since April 2023. If this momentum continues for the rest of the month, it would imply an average daily export increase of over 400,000 barrels compared to January. In June of last year, when Israel and the U.S. bombed Iranian nuclear facilities and other sites, Saudi Arabia briefly increased its oil extraction. As Trump considers another attack, the market is closely monitoring any "unusual activity" from the major Middle Eastern oil producer. The Saudi Energy Ministry did not immediately respond to a request for comment.
During the week of February 16-22, 2026, loadings of Iranian crude oil and condensate broke the previous weekly record, surging to nearly 27 million barrels, approximately 3.78 million barrels per day. This sudden spike is significantly higher than the recent baseline of around 10 million barrels per week. Consequently, loadings so far in February have climbed to about 2.3 million barrels per day, a 50% increase compared to the three-month average of 1.54 million barrels per day. If this pace is maintained, February is set to record the highest monthly loading rate since 2018, before the re-imposition of nuclear-related sanctions.
Kpler tracking data indicates that the volume of Iranian oil in floating storage reached a new high of nearly 200 million barrels. Besides increased loadings, sustained slowing demand from China has supported this record level. China's imports of sanctioned Iranian crude and condensate have averaged 1.20 million barrels per day so far in 2026, down 14% compared to 2025 and 18.15% lower than the peak of 1.48 million barrels per day in 2024.
On February 20, the U.S. Supreme Court ruled that the president does not have the authority to unilaterally impose broad tariffs using the International Emergency Economic Powers Act, directly nullifying previously imposed punitive tariffs on countries including India. This ruling significantly reduces the U.S. government's flexibility to pressure other countries' energy policies through tariffs, providing India with greater space to maintain its energy trade with Russia.
As one of the largest buyers of Russian crude, India's procurement of Russian oil has long been a thorny issue in U.S.-India relations. In August 2025, the Trump administration imposed an additional 25% tariff on Indian goods, which, combined with the existing 25% reciprocal tariff, resulted in a total tariff rate of 50% on Indian exports to the U.S.—the highest among all U.S. trading partners.
Earlier this month, the U.S. and India reached a provisional trade agreement, reducing U.S. tariffs on Indian goods from 50% to 18%, and on February 6, an executive order canceled the punitive 25% tariff specifically targeting India. Trump claimed that India committed to "directly or indirectly ceasing imports of oil from the Russian Federation" and shifting to purchasing U.S. energy products. However, the U.S.-India joint statement did not explicitly mention an Indian commitment to reduce Russian oil imports, stating only that India plans to purchase $500 billion worth of goods, including energy, from the U.S. over the next five years.
According to energy data provider Kpler, India imported an average of 1.71 million barrels per day of Russian crude in 2025, but imports have fallen to 1.16 million barrels per day so far in February 2026. Muyu Xu, a senior crude analyst at Kpler, noted that due to the provisional U.S.-India agreement, Indian refineries have temporarily halted bookings for Russian crude arriving in April this month. However, following the Supreme Court ruling, Xu believes India has room to maintain Russian oil imports at a level of 800,000 to 1 million barrels per day.